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Company Incorporation

Overview

All businesses needs to be registered with the Suruhanjaya Syarikat Malaysia (SSM), also known as the Registrar of Business in Malaysia.

Not only for the purpose of taxation, but also getting access to various incentives and benefits Malaysia has to offer.

There are few types of business entity commonly registered in Malaysia, namely:

  1. Sendirian Berhad (SDN BHD) also known as Private Limited Company
  2. Berhad (BHD) also known as Public Limited Company
  3. Partnership
  4. Limited Liability Partnership (LLP)
  5. Enterprise or Sole Proprietorship
  6. Company Limited By Guarantee
  7. Foreign Companies
Service Providers

Types of Business Entities

Type of entity What is this Pros Cons
Sole proprietorship An structure for a single-person business

All business income is considered your personal income

Most suitable for a one-person venture with no employees

Simple: fast and cheap to set up; owner only required to pay an annual fee of RM90-100 to the SSM to keep business renewed

No audit and annual requirement

Easy to convert into a limited company

Easy to exit: can be closed down by merely filing a form to the SSM

Unlimited liability: if sole proprietorship cannot meet its debts, creditors can go after the owner’s personal assets

Tax: Business income is taxed at the same rate as your personal income

Impermance: business ownership cannot be transferred. Death of the owner will also cause the sole proprietorship to be terminated

Partnership An entity with two or more business owners

Most suitable for professional firms such as lawyers and accountants; partnerships that does not seek to raise funds

Same as sole proprietorship Same as sole proprietorship
Limited liability partnership (LLP) Hybrid between a private limited company and partnership Separate legal entity: capable of acquiring, owning, holding and developing or disposing of property

Less compliance requirements: not required to audit its accounts annually

Cannot issue shares: cannot have shareholders and raise funds from the market
Private limited company (Sdn Bhd) The most common form of companies in Malaysia

Suitable for smaller companies and SMEs

Separate legal entity: can acquire assets, go into debt, enter into contracts, sue or be sued in its own name and has a perpetual succession

Limited liability: liability of the members/owners is limited to the amount that they each have contributed as capital to the company. If the company fails to meet its liabilities, the creditors will not be able to go after the owners’ personal assets.

Limited growth: shareholders limited to 50, prohibited from inviting the public to subscribe to its shares
Public limited company (PLC) Public limited companies are usually listed companies and govern by the Bursa Malaysia Securities Berhad and the Securities Commission of Malaysia

This type of entity is usually the type selected by large businesses.

Separate legal entity

Limited liability: shareholders’ liability limited to their capital contribution

Great access to capital: can offer shares to the public, no limit to the number of shareholders

Costly & time consuming: a lot of legal formalities required, strict controls and regulations to comply
Company limited by guarantee Most suitable for non-profit organizations, charitable bodies, foundations etc. Liability of the members are limited to the amount which the members have undertaken or guaranteed to contribute Not allowed to own or release property rights

All profits must be used for purposes stated in foundations objectives

Foreign companies Companies already incorporated outside of Malaysia but has set up business premises and operations in Malaysia

Suitable for foreign companies that is undertaking operations in Malaysia/providing customer service

Suitable for foreign companies that is undertaking operations in Malaysia/providing customer service

Ability to set up and conduct operations in Malaysi Not allowed to engage in trading or wholesale activities

Steps to Incorporate

Here are the basic steps to incorporate a company in Malaysia:

  1. Choosing a name and requesting for the availability of the name
  2. Obtain approval of the company name from SSM. This will usually take 1 hour to 1 working day upon submission of the company name to the SSM.
  3. Filling documents for incorporation of company. This will usually take 3-5 working days upon submission.
  4. Issuance of Certificate of Incorporation by SSM
  5. Filling of statutory forms with SSM and convene the First Board of Directors meeting. This will take 1-2 working days.

Cost and Timeframe

Type of entity Main requirements Estimated Cost Estimated Timeframe
Sole proprietorship Malaysian citizens and permanent residents RM90 + RM5 per bank branch Same day
Partnership Malaysian citizens and permanent residents RM90 + RM5 per bank branch Same day
Private limited company (Sdn Bhd)
  1. Company name search
  2. Memorandum & articles
  3. 5 set of CTC copy of Memorandum & Articles of Association
RM2000-3000

Company name search RM30/search

SSM fee: RM1000

Stamp duties: RM200.00

Common seal, share certificate book, minutes

Book, register book, secretarial file – varies

Company secretariat monthly cost – varies

Approx. 1 week
Company limited by guarantee The incorporation cost will be the same as above.

Additional fees will be depending on the application to the Ministry

8 – 12 months to complete